NJ Medical Facilities Penalized for High Number of Hospital-Acquired Infections

‘Incentive’ program means 1 percent cut in Medicare payments for more than a third of state’s hospitals

Some of what are considered New Jersey’s best hospitals are among those that will lose significant federal funding because too many patients have acquired infections and other conditions while in their care.

More than one-third of the state’s hospitals are being hit with a 1 percent cut in their Medicare payments for having above-average rates of hospital-acquired conditions (HACs).

The cut affects all Medicare payments for the federal fiscal year that began on October 1 and lasts until September 30.

These penalties are in addition to ones already imposed on hospitals that have too many readmissions after treating patients for certain conditions. Those penalties were as much as 2.65 percent of Medicare payments. All told, penalties implemented with the 2010 Affordable Care Act can cost hospitals more than 5 percent of Medicare reimbursements this year.

The HAC penalty is intended to give hospitals an incentive to reduce the incidence of conditions such as bedsores and infections from catheters in large veins.

Of the 62 eligible New Jersey hospitals, 23 -- or 37 percent -- were affected by the 1 percent reduction. Only the District of Columbia and three other states -- Utah, Connecticut, and Nevada -- had higher penalty percentages, according to a Kaiser Health News analysis.

Hospitals have been making headway on reducing these conditions, a point emphasized by a spokeswoman for the New Jersey Hospital Association.

“There has been significant progress in reducing these hospital-acquired conditions both in New Jersey and nationally, and that’s what makes this penalty program very unfortunate,” Kerry McKean Kelly said.

She noted that the penalty is applied to a fixed percentage of hospitals with the lowest scores, regardless of whether they have made improvements.

“That’s what we’re seeing in New Jersey,” Kelly said of hospitals that are making progress but were still hit by the penalty. She noted that the hospital association has worked with the federal government on Partnership for Patients, a program that is designed to reduce hospital-acquired conditions and readmissions.

There was a statewide drop of 32.2 percent in 13 conditions from 2012 to 2013, leading to an estimated savings of between $102 million and $125 million in additional costs, which NJHA officials have partly attributed to the program. In addition, readmissions fell 8.7 percent.

But David Knowlton, president and CEO of New Jersey Health Care Quality Institute, said the progress has occurred in the context of an excessively high number of hospital-acquired conditions.

“I think it is a good policy, but I understand the hospitals’ position,” Knowlton said of the federal penalties.

Knowlton said it’s important to remember the lives that continue to be lost when contemplating the statistics on hospital-acquired conditions. A 2013 study published in the Journal of Patient Safety estimated that there are more than 400,000 preventable deaths annually associated with hospital care.

“We’ve got to do something and this is, I think, a good way to start to move the bar,” Knowlton said. He added that the penalties are “good disincentives -- I would love to see some incentives to hospitals that are doing really well.”

Knowlton, a former state deputy health commissioner, expressed disappointment that New Jersey stopped publishing patient-safety indicators in the past two years, saying that this data was useful in informing hospitals of potential problems before they were hit with federal penalties.

“Incentives motivate and transparency motivates, and we’ve got to keep the pressure up on both fronts,” Knowlton said. “It’s important enough to make it happen.”

The 1 percent penalty is based on three factors: the number of patients with central-line-associated bloodstream infections; the number of patients with catheter-associated urinary tract infections; and a combination of eight different conditions, including bedsores, postoperative hip fractures, and accidental lacerations. Each hospital was assigned a score that combined these factors -- the quarter of hospitals with the worst scores nationally received penalties, although some were ineligible for the penalties because they specialize in certain treatments or patient populations.

A Kaiser Health News article noted that while the federal analysis adjusted for the differing levels of sickness and ages of each hospital’s patients, academic medical centers scored worse than most and have complained that the federal adjustments are insufficient.